Instacart may have misclassified workers under gig law, judge says

This is the first court decision since California's new gig worker law went into effect and it could lead the way to enforcing the law.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
3 min read

Instacart may be forced to reclassify its California shoppers as employees.


When California's AB 5 gig worker bill went into effect in January, the state expected a wave of lawsuits to enforce the law. The first of such cases has just worked its way through a San Diego court. On Monday, Superior Court Judge Timothy Taylor ruled that the grocery delivery company Instacart has likely misclassified the majority of its California shoppers as independent contractors.

The ruling comes in the form of an injunction against Instacart, which means the company must halt its service in San Diego until it classifies its workers correctly under the law. However, the judge also temporarily stayed the enforcement of the injunction, so the ruling won't go into effect immediately and it can be appealed. This news was earlier reported by NBC.

"We disagree with the judge's decision to grant a preliminary injunction against Instacart in San Diego," an Instacart spokeswoman said. "We will be taking steps to keep that stay in place during the appeals process so that Instacart's service will not be disrupted in San Diego."

Most workers for gig economy companies, like Instacart, Uber, Lyft, Postmates and DoorDash, are classified as independent contractors. While that classification can mean increased flexibility for workers, it can also mean they're shouldering many of the costs of their employers. For example, workers pay for their own car, phone, gas and vehicle maintenance. They also don't get basic benefits, such as minimum wage guarantees, overtime pay and health insurance.

AB 5 changes all of that. Under the new law, companies using independent contractors in California will be put to a three-part "ABC" test to determine whether they must reclassify their workers. If they don't pass that test, they'll have to turn their workers into employees. Washington, Oregon, New York and New Jersey are also considering legislation similar to AB 5.

The San Diego lawsuit against Instacart was brought by City Attorney Mara W. Elliot in September. In Taylor's ruling Monday, he wrote that the city "makes a very plausible showing of improper classification under the ABC test."

"While change is hard," Taylor wrote, "[Instacart] cannot legitimately claim surprise or that it has not had time to adjust its business model."

Union leaders, gig worker activists and state lawmakers who supported AB 5 are applauding the court's decision.

"For years, gig companies like Instacart have banked on the exploitation of workers who live beneath the poverty line, wondering where their next meal will come from or how they will pay their rent next month," said Amber Baur, executive director of the United Food and Commercial Workers Western States Council union. "We're proud to have the court rule in favor of these hard-working employees."

Along with fighting AB 5 in the court, Instacart has joined other gig companies in sponsoring a ballot initiative to bring the issue to voters in November. Uber, Lyft and food delivery company DoorDash have each chipped in $30 million to support the initiative, known as the "Protect App-Based Drivers and Services Act." Instacart and Postmates have each added $10 million, bringing the total raised to $110 million. 

To get on the November ballot, the proposal needs to collect more than 623,000 signatures.